In the last two years, Eastside People has worked with 141 charities and social enterprises as they have been tracking and developing their ESG practices via our Free ESG survey tool, and this is what we have learnt about why ESG matters. Blog by Eastside People CEO Richard Litchfield.
Let’s start with a definition. Charity ESG is the management and measurement of the environmental, social and governance activities of a not-for-profit organisation.
It is the stuff that is not-primarily financial, although this doesn’t mean it can’t have a business benefit. In fact, quite the opposite.
We have developed a charity ESG model which goes into more detail and breaks down each E, S & G component into internal and external aspects. Our model makes it more manageable for a charity to get their arms around this activity, and it’s customised for our sector, aligning to the Charity Governance Code and reporting standards such as the Charity SORP 2026. We encourage charities to consider opportunities as well as risks, recognizing there are benefits which can come from better practices in these areas.
Why does this matter?
At a time of financial pressure and the political retreat on diversity (especially in the US) you may well ask why does this all matter.
We argue that charity ESG matters because it’s a weapon to help organisations demonstrate they are well-run, well-governed and do make an impact on planet and society. In other words, it helps to distinguish the wheat from the chaff.
Here are four specific reasons:
- Trust: Charities and social enterprises are expected more than most to back up their aspirations (mission) with evidence that they’re good places to work and do make a positive impact on planet and society. You can call this a matter of trust. In our framework, we measure public reputation and accountability. The Charity Commission has found that public trust in the sector is directly linked to organisations being transparent and operating to high ethical standards.
- Fundraising: Many funders such as local authority commissioners, the NHS and donors are seeking evidence around sustainability and impact. As the competition for funding increases, charities will benefit from being able to differentiate themselves. This is also true with corporate partnerships. Supply chain legislation requires large companies to report on the ESG of their partners meaning that charities will increasingly be asked to disclose evidence about their effectiveness and impact.
- Next Generation: Studies show that young people care more than any other part of the workforce that their employees walk the walk and can demonstrate strong environmental credentials. As one charity responding to our survey told us, “Our young beneficiaries have proactively told us that environmental concerns are important to them.”
- Annual Reporting: A new version of the Charities Statement of Recommended Practice (SORP) is coming into force from 1 January 2026. This will require large charities to report on their environmental, social and governance matters while charities of all sizes are encouraged to do so. As part of the reporting, organisations will need to assess the progress and materiality of their different ESG activities, track KPIs, and being able to comment on their strategies for the future. So, despite the sense of a global, political trend away from climate action and sustainability, regulation for not-for-profits is actually increasing not lessening in the UK.
These are not theoretical points. Over two years now 141 charities have completed Eastside People’s free ESG survey for charities, helping them to assess and track their progress.
We have learnt there is a group of charities of all shapes and sizes that, despite the headwinds are actively wanting to be leaders in ESG. They remain committed to the key principles, they want to be able to measure their diversity and sustainability, and are keenly focused on advancing their environmental, social impact, and their governance practices.
In our most recent survey, 81% of the 141 organisations told us that they wanted to better understand where they are at the moment with ESG, and what their next steps should be, while 66% of organisations wanted to benchmark themselves against others and plug into a network of support.
For this reason, Eastside People has developed a suite of support tools to help charities navigate this and to plan for the future. This includes a charity ESG model with different ESG components, a free survey so charities can assess their progress, and an ESG strategy development service. This is a start and there is much more to come.
Commenting about the survey tool, Dr Alex Rhys, Chief Executive of It Gets Better UK said “The fact that Eastside People offers this survey freely to organisations of all sizes matters enormously. Small charities like It Gets Better UK don’t have the resources for expensive benchmarking or sector research, but we need that intelligence just as much as larger organisations – arguably more so, because we’re operating with far less margin for error. When you’re making strategic decisions with limited reserves, you need to understand the broader landscape you’re operating in.”
As Jane Ide, CEO ACEVO said “These findings reflect what many of our members are experiencing day to day: charity leaders recognise the importance of ESG, but the reality of financial strain and regulatory complexity often means tough decisions about where to focus limited time and resources. Yet even within these constraints, the sector continues to lead the way on social responsibility, particularly around staff wellbeing. ACEVO is proud to partner in work that brings greater coherence, practical guidance and collective ambition to the ESG agenda, ensuring leaders are equipped to build resilient, ethical and future-focused organisations.”
